York Water Files For Rate Hike To Recover Capital Expenses

York Water Company (NASDAQ:YORW) filed an application with the Pennsylvania Public Utility Commission (PPUC) to increase base water rates in its services areas. Through this rate increase filing, the company intends to recoup the capital investment made since the rate filing in 2013 as well as for the planned investment till Feb 2020.

The rate approved in 2014 raised the company’s annual revenues by $5 million. Since the last rate filing, the company has invested nearly $77 million to upgrade and strengthen drinking water and wastewater infrastructure in its service territories.

Rate Hike to Fund Capex Plans

The rate hikes no doubt increase the monthly budgets for the customers. However, water utility companies need funds to support capital investment to reinforce and replace its existing infrastructure or to replace the aging one with new set-ups. The capital investments are necessary to keep the essential supplies like water and wastewater services running 24x7 and to improve water quality as well as operational efficiency through upgrades of facilities and equipment.

The company filed for a general rate hike of $6.4 million in base water and $ 288,623 in base wastewater. If granted immediately, the rate increase would be effective August 1, 2018.

Aging Water Infrastructure Needs Replacement

Some of the water infrastructure in the United States are a century old, requiring immediate replacement or restructuring. The U.S. water system is wearing away and regular investments determine the need of the hour to restore it. Recently, the United States Environmental Protection Agency (EPA) announced to pump in significant funds to mend the water infrastructure projects.

Per the program initiated by the Water Infrastructure Finance and Innovation Act (WIFIA), a $5.5 billion will be provided as low-cost loan to renovate water infrastructure in the country. This funding proposal could leverage more than $11 billion in water infrastructure projects.

So, if the commission continues to support regulated water utilities with justifiable rate hikes, it will assist the utilities to carry on with their infrastructure strengthening work.

Price Movement

In the past 30 days, York Water Company's stock has inched up 1.7%, outperforming its industry’s decline of 6.1%.

Stocks to Consider

York Water Company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Two better-ranked stocks from the same Sector are as follows:

UGI Corporation (NYSE:UGI) sports a Zacks Rank #1. It reported first-quarter 2018 adjusted earnings of $1.69 per share, surpassing the Zacks Consensus Estimate of $1.51 by 11.9%.

Ameren Corporation (NYSE:AEE) has a Zacks Rank #2. It reported first-quarter 2018 adjusted earnings of 62 cents per share, outpacing the Zacks Consensus Estimate of 58 cents by 6.9%.

Global Water Resources, Inc. (NASDAQ:GWRS) holds a Zacks Rank of 2. The company released first-quarter 2018 adjusted earnings of 2 cents per share, beating the Zacks Consensus Estimate of a penny by 100%.

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